Controversial plans for the partial privatisation of Royal Mail risk "nationalising its debt and privatising its profits," MPs were told yesterday.

The business secretary, Lord Mandelson, has already given his backing to the recommendations of an independent review into postal services that the government take responsibility for the group's ballooning pension fund deficit and its need to recruit a strategic partner.

But Billy Hayes, general secretary of the communication workers union, the CWU, attacked Mandelson's support for bringing in an outside minority shareholder.

The government would in effect be removing the pension fund liabilities from Royal Mail's balance sheet, improving the financial health of the company and making it more attractive to an outside investor, Hayes told the cross-party business and enterprise committee of MPs.

"Why should we nationalise the debt and privatise the profits?" Hayes said.

So far one company, the Dutch mail group TNT, has expressed interest in taking a minority stake, though other companies, including the private equity firm CVC, have also been mentioned.

Hayes insisted the government should stick to its manifesto promise of keeping Royal Mail within public ownership.

He said the chairman of the review, Richard Hooper, had been looking backwards instead of forwards. "I thought [Hooper] was going to be the new

Doctor Who, going back in time to 1998." The union's deputy general secretary, Billy Ward, insisted Royal Mail could be modernised within the public sector and with the current management but insisted the management needed "to commit themselves to the future of the industry".

Earlier Hooper had told the committee that his review had put forward three key recommendations: the introduction of a strategic partner with management experience of turning round a postal network; measures to address the pension fund deficit, and transferring regulation from the existing industry watchdog, Postcomm, to Ofcom.

"We asked the government not to pick and mix. This was not a la carte but a three-course meal."

Coping with the pension fund deficit was already costing £270m a year and Royal Mail would not be able to attract a strategic partner without government measures over the deficit.

Hooper, whose report said the Post Office should stay entirely in public ownership, declined to be drawn on how large a stake an outside shareholder should be allowed to take in the rest of the business or how much money was needed for modernisation. It was not for him to tie the government's hands in negotiations over how big a stake to permit, he said.

Hooper came under fire from Lindsay Hoyle, Labour MP for Chorley, who said:

"I think you are driven by dogma. You don't like Royal Mail - you want to see it broken up."